That is different from growth or value funds, which invest in companies whose stock is expected to advance, regardless of whether the companies even pay a dividend. Many fast-growing companies don’t pay a dividend, as they prefer to funnel most of their income into fueling their growth.

Mutual funds that focus on income are generally best- suited to those who need regular distributions of cash, such as people in retirement. However, even retirees might remain invested in some other funds or stocks and sell off a portion each year to generate the income they need.

Research funds at Morn-ingstar.com and learn about promising ones via our “Rule Your Retirement” newsletter, which you can try free at fool.com/shop/newsletters.

Fool’s school: Insiders and institutions

If you’re studying a small company to decide whether to invest in it, it’s good to find out whether insiders or institutions own many shares.

Insider holdings are generally a good thing. If employees own a chunk of a company, they have an incentive to make it succeed. Insiders buying shares is also a promising sign, as they must expect shares to rise in value.

Don’t be alarmed by insider sales, though. Company stock is a major portion of many executives’ compensation, so they might occasionally sell some shares to send a kid to college or to buy a car.

Still, lots of executives selling is a red flag.

With small companies, we like to see insiders owning 15 percent or more — and little ownership by institutions such as mutual funds and pension funds.

When promising small companies have little or no institutional ownership, it’s often because the big players are sidelined. Small companies usually have relatively few shares outstanding, and their total value is modest.

Those of us who discover Scruffy’s early and buy shares before Wall Street does stand to benefit. Once Wall Street gets involved and institutions begin buying lots of shares, high demand will boost the stock price — and the wealth of existing shareholders.

Discovering a small but growing company with significant insider ownership and low institutional ownership is a promising scenario. The company should be sound, though, with growing sales and earnings and a strong competitive position, among other things. You can call any public company and ask its investor-relations department about insider and institutional ownership. Or look them up online, at sites such as finance.yahoo.com.

Just remember that small companies can be volatile and are often best for speculative investors with some experience.

Foolish trivia

Tracing my roots to 1858, I’m the product of a big 1989 merger that created what was then the world’s second-largest pharmaceutical company. In my past, you’ll find a laxative mineral salt, Clairol hair products, Vitalis hair tonic for men and Mum underarm deodorant. I introduced the first electric toothbrush in 1961. In the 1940s, I had the largest penicillin production plant in the world. I rake in more than $21 billion annually and spend close to $4 billion on research and development. My biggest sellers include Plavix for preventing clots and Abilify for mental health. Who am I?

Last week’s trivia question: I trace my roots to 1847 and a confectionary company in New England. Known for a colorful round treat, I also produce Sweethearts, Mary Janes, Candy Buttons, Clark Bars, Squirrel Nut Zippers, Slap Stix and Sky Bars. In 1847, a newly invented lozenge cutter made my first product possible. I offered profit-sharing to employees in 1906. During World War II, I provided rations and emergency items for the armed forces. In 2007, I was bought by the private-equity firm American Capital Strategies. Based in Massachusetts, I’m America’s oldest continuously operating candy company. Who am I?